Travel industry braces for lower fares, hotel vacancies

Originally published November 25, 2008 at 12:00 am

Updated November 25, 2008 at 3:43 pm

The travel industry is bracing for a painful holiday season as people scale back their discretionary spending. But that is good news for anyone who has yet to book a winter getaway, with hotels, airlines and cruise operators introducing last-minute deals to entice vacationers.

The travel industry is bracing for a painful holiday season as people scale back their discretionary spending. But that is good news for anyone who has yet to book a winter getaway, with hotels, airlines and cruise operators introducing last-minute deals to entice vacationers.

Holidays are the busiest time of year for most travel companies, a season when they command the highest rates for popular winter destinations.

But as the economy’s decline has accelerated, nervous consumers have started to shut their wallets and put off vacation plans. For the first time in six years, Thanksgiving travel is expected to decline, according to AAA, with about 41 million Americans taking trips of 50 miles or more from home, 1.4 percent less than last year.

Despite lower gas prices, 1.2 percent fewer Americans expect to travel by automobile, AAA said — more than 33.2 million Americans this year, off from the 33.6 million people who drove a year ago.

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“There is no part of the industry that will go unscathed,” said Henry Harteveldt, a travel analyst with Forrester Research.

Now travel companies are rushing to fill space, with resorts in popular holiday hot spots reducing minimum-stay requirements, throwing in extras and cutting prices.

Ski.com, which negotiates discounts with resorts, is offering rate reductions as deep as 50 percent for lodging in Steamboat Springs, Colo., over the Christmas and New Year’s holidays.

For hotels, the holiday outlook is not looking very merry or bright. “This will be one of the largest declines in hotel occupancy,” said Bjorn Hanson, an associate professor at the Tisch Center for Hospitality, Tourism and Sports Management at New York University. “The only comparable periods were 2001 and the early 1970s.”

With declines in bookings across the board, Hanson predicts hotel-occupancy rates to decrease to as low as 53 percent this holiday period from about 58 percent last year.

“It’s just really hard to find some good news — except for travelers,” he said. “Without trying too hard,” he said, consumers will be able to find hotel rates 10 percent lower than last year.

Faced with empty seats, airlines are cutting prices. The average one-way coach ticket bought in advance was $117 last week, down 13 percent from $135 in early July, according to Harrell Associates, a firm that tracks airfares.